PayPal is to take on Australia's home-grown buy now, pay later players with the nationwide launch of a fee-free instalment payments product.
The new PayPal Pay in 4 product will only appear as an option at checkout for consumers who have a PayPal account in good standing and for eligible purchases valued between $30 and $1,500.
The firm says it will predominantly use its own data and analytics engines and, when required, will run credit checks with an external credit bureau to assess whether customers can afford the loan.
Consumers can split the cost of purchases between $30 and $1,500 into four interest-free payments, consisting of an initial payment and three automatic fortnightly instalments.
The company started rolling out Pay in 4 in the US in October and has since offered it in the UK and France.
However, the no-fee twist is exclusive to Australia, where the firm has nine million active accounts.
Andrew Toon, general manager, payments, PayPal Australia, says: “Our business model does not rely on late fee revenues and we believe that many people who miss a payment do so by mistake, not design. By removing late fees, we are providing our Australian customers with a secure buy now, pay later service without the risk of being penalised for late payments.”
The news - alongsiden Apple's potential entry into the market - delivered a body blow to local rivals AfterPay and Zip, whose share prices tumbled by seven percent in early morning trading.
Further competition to local operators is also on the way, with Commonwealth Bank of Australia ptreparing to step into the ring next month with a new product called StepPay.